FAQs: Customs Valuation Part 2

Summary

The script discusses global customs valuation rules, emphasizing that WTO member countries must adhere to WTO agreements, including Article 7 of GATT and the Agreement on Implementation. It outlines the five-year grace period for new WTO members to implement customs valuation agreements. It contrasts the Brussels Definition of Value with the WTO's transaction value-based system and details six valuation methods, including transaction value and fallback methods. The script also notes the possibility for importers to request a reversal in the application order of certain valuation methods.

Takeaways

• 🌍 Customs valuation of imported goods must comply with national laws, but WTO member countries must base their laws on specific WTO instruments.
• 📜 The relevant WTO instruments include Article 7 of the General Agreement on Tariffs and Trade, the Agreement on Implementation of Article 7, and the Uruguay Round Ministerial Decision.
• ⏳ A WTO member country is generally required to implement the Agreement on Customs Valuation as soon as it becomes a member but can delay for up to five years.
• 📏 Some countries still use the Brussels Definition of Value from the 1953 Convention, which differs from the WTO's valuation system.
• ⚖️ The Brussels Definition of Value is based on an estimated or normal market value, whereas the WTO's system relies on the actual price paid or payable for the goods.
• 📐 The WTO's customs valuation principles, under Article 7 of the 1994 GATT, emphasize that customs values should not be arbitrary or fictitious and must reflect the actual value of goods or comparable goods.
• 🔍 If the actual value of goods is not ascertainable, the customs value should be based on the closest ascertainable equivalent.
• 🔢 The Agreement on Customs Valuation outlines six valuation methods: transaction value, comparative value (identical goods), comparative value (similar goods), deductive value, computed value, and fallback method.
• 🔄 Article 4 of the Agreement allows for altering the sequence of applying deductive and computed value methods upon the importer's request, with developing countries needing customs approval for such changes.
• 📊 The Agreement on Customs Valuation aims to provide a fair, uniform, and neutral system for determining customs value, reflecting the actual transaction value of goods to the greatest extent possible.

Q & A

What is the basis for customs valuation in WTO member countries?

In WTO member countries, customs valuation must be based on the instruments under the WTO, including Article 7 of the General Agreement on Tariffs and Trade (GATT), the Agreement on Implementation of Article 7, and decisions of the WTO Committee on Customs Valuation.

How soon must a WTO member country implement the Agreement on Customs Valuation?

WTO member countries are required to implement the Agreement on Customs Valuation as soon as they become members, but they may delay its application for up to five years from the date of accession.

What are the key principles of customs valuation under GATT Article 7?

The key principles are that the customs value should not be arbitrary or fictitious, should not be based on indigenous goods' value, and must reflect the actual value of goods imported or similar goods under competitive business conditions.

What are the main differences between the Brussels Definition of Value and the WTO Agreement on Customs Valuation?

The Brussels Definition of Value is based on a national concept of what a good would fetch in the open market, whereas the WTO Agreement is based on the actual price paid or payable for the goods, making it more positive and transaction-focused.

How is the 'actual value' of goods determined when it cannot be ascertained?

When the actual value cannot be determined, customs valuation should be based on the nearest ascertainable equivalent value derived from similar transactions under comparable conditions.

What are the six methods of customs valuation provided under the Agreement on Customs Valuation?

The six methods are: 1) Transaction Value Method, 2) Comparative Value Method (identical goods), 3) Comparative Value Method (similar goods), 4) Deductive Value Method, 5) Computed Value Method, and 6) Fallback Method.

Can an importer request a change in the order of customs valuation methods?

Yes, under Article 4 of the Agreement on Customs Valuation, importers can request the reversal of the order between the Deductive Value Method and the Computed Value Method, but developing countries may require customs authority approval for this.

What is the role of the transaction value method in customs valuation?

The transaction value method is considered the primary basis for customs valuation, as it focuses on the actual price paid or payable for the goods being imported.

What flexibility does the fallback method of customs valuation offer?

The fallback method allows greater flexibility by using previous valuation methods but adapting them where necessary to determine the customs value when other methods cannot be applied.

Which countries still follow the Brussels Definition of Value for customs purposes?

Some countries still adhere to the Brussels Definition of Value, which is based on the 1953 Convention on the Valuation of Goods for Customs Purposes.